Why Inspect When You Can Raid?

SF Weekly Staff

1 year ago

Last Wednesday in Sonoma County, officials responded to a report of workplace safety violations with armed law enforcement officers in Kevlar and camouflage.

Until that day, a major cannabis company called CBD Guild had been producing cannabis oil cartridges, cannabis gel-caps, sprays, and other marijuana products sold without issue all over the state under the popular brand names AbsoluteXtracts and Care By Design. Just a few weeks before, the company was comfortable enough to welcome in officials from local and state government to take a peek at the operation, which was considered a “model” for other companies in the state's burgeoning commercial cannabis industry to follow.

Instead, Santa Rosa Police Department officers and Drug Enforcement Administration agents converged on the office park, and on other properties associated with the company, looking for life-threatening safety hazards. Based on a tip they'd received five days earlier from a former employee, they were looking for a hash-oil lab that used butane to extract cannabis' active ingredients from the raw flower — an act that is still a felony offense under state law outlawing the manufacture of drugs using chemicals.

Police seized cash, computers, and manufacturing equipment. CBD Guild founder and principal Dennis Hunter was arrested and held on $4 million bail, as the Santa Rosa Press Democrat first reported.

The problem is that there was no hash oil and no butane at CBD Guild. The company uses an extraction method that relies on pressurized and heated CO2 — a major distinction, since butane extraction is illegal under state drug laws that remain unchanged as legalization draws nearer. Police would have known that had they been on the tour, or had they received accurate information from their source — or had they simply visited CBD Guild with a knock on the door rather than a military-style raid.

(As for the individual who called the police in the first place? He appears to be a disgruntled former employee who made good on a threat to report the company to authorities on his way out.)

But this is still how things are done in California. Even after Gov. Jerry Brown signed into law rules specifically allowing for-profit commercial cannabis activity, and even after commercial cannabis operations like CBD Guild welcomed government officials in for a visit, old-school raids are still a reality.

This was not the first time police visited a well-known California cannabis industry company in 2016, either. In January, helmeted officers armed with assault weapons burst into the San Diego offices of Med-West, which supplies CO2-extracted cannabis oil to brands like Bhang.

There, as in Sonoma, police had a search warrant signed by a judge authorizing a search for a “hash oil lab.” And again, as in Sonoma, there was no butane in use. (Worse, according to Med-West founder James Slatic, there wasn't even any CO2 extraction at the location police raided.) But law enforcement still froze Med-West's bank accounts, and the company remains out of business.

While police have publicly said they believe CBD Guild to be a massive and illegal operation that produces “millions” of dollars of cash monthly, they appear to be tacitly admitting they were off-base. A day after he was held on that bail that would shame a murderer, Hunter was sprung on no bail and with no charges filed. The company says it's back in operation, though police still have possession of expensive equipment, including a $1 million machine that tests for pesticides, according to attorney Joe Rogoway.

There are CO2 manufacturing facilities and butane-powered extraction labs all over the state. Not very many are as big as CBD Guild, but they aren't getting raided in this way.

If CBD Guild did anything wrong, it might have been doing too much too soon — and in the wrong place. Under the new state rules, a cannabis company can do business as long as there are local rules in place allowing the business, be it a massive grow or an extraction lab.

Santa Rosa was in the process of creating those local rules — they could be in place as soon as later this summer — when CBD Guild received its visit from the cops. Whether or not CBD Guild would have been wholly compliant with those rules when they went into place, no one could say. (That the raid happened a week before the annual conference of the National Cannabis Industry Association, of which Med-West's Slatic was a founding member, appears to be pure coincidence.)

So why did this happen, and why did law enforcement investigate what sounds like a code enforcement issue with a raid? The fairest and most accurate answer: Because they still can.

It doesn't appear the raid will have much of a chilling effect. There will still be fierce competition to provide oil cartridges and other cannabis newbie-friendly products. But under the current status quo, they just can't be assured they'll not have a disruptive visit from the law, still eager for any excuse to drop in the same way it always has.